Abstract
This chapter critically reviews the recent trend of home states of multinational enterprises to legislate CSR in global supply chains. This development can be seen as part of an attempt towards filling the governance gap for CSR in such chains. The chapter critically assesses different forms of transparency legislation on CSR such as the transparency in supply chains clause in the UK Modern Slavery Act 2015. It places the different forms of disclosure laws onto a continuum, according to their scope, legislative design and stringency as well as enforcement mechanisms. The chapter argues that the present state of disclosure laws is unable to sufficiently impact on the approach of multinational enterprises towards promoting CSR in their supply chain. It is argued that, instead, due diligence legislation should be imposed on companies. The chapter reviews the models of the UK Bribery Act and the French devoir de vigilance bill and makes the case for stringent home state legislation.
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Notes
- 1.
International Labour Organisation (2016), p. 39.
- 2.
Cragg (2010), p. 751.
- 3.
Cragg (2010).
- 4.
Nolan (2016).
- 5.
OECD (2011).
- 6.
OECD (2016), p. 16.
- 7.
- 8.
See, e.g., Rühmkorf (2015).
- 9.
European Commission (2011) para 3.1.
- 10.
European Commission (2001), p. 20.
- 11.
Buhmann (2011), p. 148.
- 12.
- 13.
Kotabe and Murray (2004).
- 14.
Cavusgil et al. (2014).
- 15.
Adams v Cape Industries (1990).
- 16.
Salomon v Salomon & Co. Ltd (1897).
- 17.
See, for example, the coverage of The Guardian on Rana Plaza.
- 18.
See Locke (2013), p. 174.
- 19.
See van Opijnen and Oldenziel (2011).
- 20.
Millington (2008), p. 365.
- 21.
Burrow (2016).
- 22.
Chopra and Meindl (2013), p. 13.
- 23.
Chopra and Meindl (2013), p. 13.
- 24.
- 25.
See Gereffi et al. (2005), p. 85.
- 26.
Gereffi and Lee (2016), p. 29.
- 27.
Gereffi and Lee (2016), p. 25.
- 28.
See Johnston (2009), p. 21.
- 29.
Berle and Means (1991) [1932].
- 30.
Berle and Means (1991) [1932].
- 31.
Fama (1980), p. 288.
- 32.
Hansmann (1988), p. 267.
- 33.
Friedman (1970).
- 34.
Friedman (1970).
- 35.
See Kurucz et al. (2008), p. 84.
- 36.
See Barrientos (2008), p. 977.
- 37.
See Muchlinski (2012), p. 148.
- 38.
Zerk (2006), p. 259.
- 39.
See generally Baughen (2015).
- 40.
McKendrick (2009), para. 7.1.
- 41.
Poole (2012), para. 11.2.
- 42.
See LeBaron (2014), p. 245.
- 43.
Vogel (2008), p. 266.
- 44.
- 45.
See Principle 2: ‘States should set out clearly the expectation that all business enterprises domiciled in their territory and/or jurisdiction respect human rights throughout their operations.’ See UN Guiding Principles on Business and Human Rights.
- 46.
Wells (2007), p. 52.
- 47.
ETI Base Code.
- 48.
Companies use CSR as part of their marketing strategies to positively influence their image in the perception of consumers, see Lii and Lee (2012), p. 78.
- 49.
UK Modern Slavery Act 2015, Section 54.
- 50.
Baldwin and Cave (1999), p. 49.
- 51.
Morgan and Yeung (2007), p. 96.
- 52.
I use ‘transparency legislation’ interchangeably with ‘disclosure laws’ and ‘statutory reporting duties’.
- 53.
See the discussion of CSR definition above.
- 54.
See for ‘command-based regulation’: Morgan and Yeung (2007), p. 80.
- 55.
Hannigan (2012), paras 9–40.
- 56.
Hannigan (2012), paras 9–40.
- 57.
French et al. (2011–2012), para. 9.9.6.
- 58.
- 59.
BIS (2012).
- 60.
Financial Reporting Council (2014), p. 14.
- 61.
Companies Act 2006, section 414A (1).
- 62.
Companies Act 2006, section 414C (1) CA.
- 63.
Companies Act 2006, section 172 (1).
- 64.
Rühmkorf (2015), p. 53.
- 65.
Companies Act 2006, section 414C (2) CA.
- 66.
Companies Act 2006, section 414C (7).
- 67.
Companies Act 2006, section 414A (3).
- 68.
Villiers (2013), p. 108.
- 69.
Under these circumstances the director is required to compensate the company for any loss suffered as a result of the misconduct, Companies Act 2006, section 463 (2) CA.
- 70.
Hannigan (2012), para 16–28.
- 71.
Villiers and Aiyegbayo (2011), p. 700.
- 72.
Villiers and Aiyegbayo (2011), p. 712.
- 73.
Villiers and Aiyegbayo (2011), p. 712.
- 74.
PWC (2009).
- 75.
Accounting Standards Boards (2009), pp. 23–25.
- 76.
Financial Reporting Council (2015).
- 77.
Modern Slavery Act 2015, section 54 (1). See also Home Office (2015).
- 78.
Modern Slavery Act 2015, section 54 (4).
- 79.
Modern Slavery Act 2015, section 54 (5). See also the guidance by the Home Office (2015), p. 11.
- 80.
Modern Slavery Act 2015, section 54 (7).
- 81.
Modern Slavery Act 2015, section 54 (6).
- 82.
Home Office (2015), p. 11.
- 83.
Court of Session Act 1988, section 45.
- 84.
See Home Office (2015), p. 6.
- 85.
Henty and Holdsworth (2015) p. 12.
- 86.
Ergon (2016).
- 87.
The Directive is available at: http://ec.europa.eu/finance/company-reporting/non-financial_reporting/index_en.htm.
- 88.
For example, the German Ministry of Justice refers to this Directive as the ‘CSR Directive’, see for example Press Release of 21 September 2016, ‘Stärkung der unternehmerischen Verantwortung durch neue nichtfinanzielle Berichtspflichten’ http://www.bmjv.de/SharedDocs/Pressemitteilungen/DE/2016/09212016_CSR-RL.html.
- 89.
Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU with regards disclosure of non-financial and diversity information by certain large undertakings and groups, Recital 6.
- 90.
Securities Exchange Act of 1934, section 18, 15 USC.
- 91.
See also Woody (2013), p. 1330.
- 92.
Bloomberg (2014).
- 93.
European Coalition for Corporate Justice (2015).
- 94.
Klinger et al. (2016).
- 95.
Bribery Act 2010, section 7 (1).
- 96.
Bribery Act 2010, section 7 (2).
- 97.
Bribery Act 2010, section 7 (5).
- 98.
Bribery Act 2010, section 8 (1).
- 99.
Bribery Act 2010, section 8 (2).
- 100.
Ministry of Justice (2011), p. 16.
- 101.
Ministry of Justice (2011), p. 16.
- 102.
Ministry of Justice (2011), p. 27.
- 103.
UK Bribery Act 2011, section 12(5): ‘An offence is committed under section 7 irrespective of whether the acts or omissions which form part of the offence take place in the United Kingdom or elsewhere.’
- 104.
UK Bribery Act, section 7(5). See also the discussion in O’Shea (2011) chapter 8.
- 105.
Baldwin and Cave (1999), p. 35.
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Acknowledgement
Dr. Andreas Rühmkorf is a member of Sustainable Market Actors for Responsible Trade (SMART) (smart.uio.no). SMART has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 693642, and we gratefully acknowledge its support.
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Rühmkorf, A. (2018). From Transparency to Due Diligence Laws? Variations in Stringency of CSR Regulation in Global Supply Chains in the ‘Home State’ Of Multinational Enterprises. In: du Plessis, J., Varottil, U., Veldman, J. (eds) Globalisation of Corporate Social Responsibility and its Impact on Corporate Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-69128-2_8
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